Will Gold Recover as the US Governmen...
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Oct
4
Jonathan Yates
Will Gold Recover as the US Government Stumbles?
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As the US Government shutdown continues, the future becomes brighter for gold and silver stocks such as Barrick Gold (NYSE: ABX), Wishbone Gold PLC (OCTBB: WISHY); and exchange traded funds such as SPDR Gold Shares (NYSE: GLD) and iShares Silver Trust (NYSE: SLV).

 

Gold and silver assets traditionally rise in value when there is a loss of confidence in a government.

What that happens, investors will sell the paper money of that regime due to a fear of inflation.  From there, funds flow to gold and silver holdings.  Speculators will join with the investors, driving up the price.

As the United States is the largest economy in the world, the shutdown should eventually result in higher prices for gold and silver stocks.  Wishbone Gold PLC should do well as its holdings are in Australia.  India and China are the largest consumers of gold in the world, so with its resources in the Queensland Territory of Australia, Wishbone Gold PLC is in a bullish position.  This was detailed on another article on this site.  Wishbone Gold PLC was just recommended by Beaufort Securities.

Barrick Gold was also just recommended by UBS.

A recent article in Barron’s reported on how undervalued Barrick Gold is at its present price, well under $20 a share.  One analyst stated that Barrick Gold was worth $44 a share, based on asset value.  Due to the that, the piece in Barron’s noted that activist investors might go after Barrick Gold.

Should that happen, the entire sector could rise as the stock of other gold and silver companies are bought up by other investors and speculators.  That would drive up the price of Wishbone Gold PLC and Barrick Gold, among other stocks.  In addition, it should be kept in mind that the recommendations of Barrick Gold and WIshbone Gold PLC was before the US Government shutdown.



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